To some of us when we hear the word pop-up our mind immediately pulls up a picture of children’s books, frozen treats, or being interrupted while surfing online for by completely uninteresting promotion. Well, you might just have to reboot your thinking, especially if you’re looking to leverage unique strategic partnership opportunities.

In NYC the Gap and the fitness chain Crunch have teamed-up to developed a pop-up store deemed the Fitness Lab. The focus of this one month alliance is to promote the Gapbody Sport collection and Crunch’s training services. You can read the original post that brought this to my on Springwise at http://springwise.com/retail/gapfitnesslab/

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This is a diagram of Rugman and D’Cruz’s ‘Flagship Model’.

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I was posed with a simple yet very poignant question today on Linked-In, is Michael Porter’s Competitive Advantage Model incomplete?

First off, here is the boiled down version of Michael Porter’s concept. There are two types of competitive advantages a business can obtain: low-cost and differentiation. These two advantages in relationship to the business’ target market scope (niche or broad) and product mix (limited or wide) yields the following four business strategies:

Cost-Leadership:  The advantage is based on being the industry’s low-cost producer in a mix of products/services; think big box stores private label brands. This is a pure value play that works best with a well-understood and accepted service.
Product Differentiation:  When a business has an actual or perceived uniqueness it is said to have an advantage by means of differentiation.
Cost Focus:  This is when one’s position allows it to offer to niche market at prices lower than the competition.
Focused Differentiation:  Leverages a better understanding of a narrow segment of the market to develop unique products that can be sold at premium prices because they solve a niche’s pressing issue.

It is my belief that the Competitive Advantage Model is too simplistic for today’s complex global environment. The ‘Flagship Model’, which was developed by Alan Rugman and Joseph D’Cruz, is an alternative framework, which comes at the situation from a network perspective. If you have studied keiretsus or chaebols then you’ll quickly grasp the concept. The framework includes government(s) and other loosely associated influences. Quite simply the Flagship Model states that success will come easier to those who adopt strategies that are mutually reinforced within a business system that incentives long-term goal among the partners in the system.

Here is how it breaks down:

• The firm is at the center of a five (5) partner and one (1) influencer structure.
• The Flagship firm provides the vision, leadership, and resources.
• Key Suppliers perform value-creating actions and have an alliance with the Flagship firm. This alliance horizontally shares strategies, resources, and responsibility. Think Intel and Microsoft or better yet the recently announced Hewlett-Packard and Microsoft strategic alliance in the data center market.
• Other Suppliers who have a traditional provider-customer relationship.
• Key Customers who provide direct feedback on functionality within their business process; logistical fit, suitability, changing needs. Think of it as a racecar driver providing feedback to the crew chief during the race.
• Key Consumers provides traditional feedback on the product or service provided via sales and focus groups.
• Selected Competitors are firms with which the Flagship firm has alliances with in selected produce areas or markets. Both concerns understand that the alliance is developed for a specific reason and that in other areas they are fierce competitors.

In the model the influencer structure is called a Non-business Infrastructure, which is composed of government(s), universities, unions, and others who can or do supply intangible inputs. As way of an example these inputs could be intellectual property.

I will be the first to admit that each model is valid, with its validity dictated by the business’ situation. One should also take into consideration that Porter’s better-known Five Forces Model is often used in conjunction with the Competitive Advantage, Value Chain, and National Competitive Advantage models. I however feel that as the world converges, thanks to enhanced communication and the rapid emergence of businesses from around the globe, it becomes harder and far less appropriate for many businesses to take a limited perspective. The Flagship model help identify the best areas in which an organization should negotiate a strategic partnership.

What are your thoughts?

I’ll take a look at some of the frameworks used to identify and exploit international business development opportunities in Parts 2 and

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image credit: Cliff Dwelling

The other day Hewlett-Packard and Microsoft announced the formation of a strategic alliance to go against IBM, Oracle, and others in the data center space. The alliance will specifically focus on helping businesses efficiently setup and operate their back-room engine.

This arrangement – an estimated $250 million investment – is sure to help the partners fend off the full integration claims of their rivals, but what can we learn, and more importantly apply, from the venture?

The last two years has changed the relative importance of collaborative agreements, whether they be vast or local in nature. Markets have globalized, product life cycles have collapsed, and social networking and communications in general have emerged as a powerful equalization force. All of the above provide unprecedented opportunity, they also usher in new challenges.

Going forward no one can rely on what brought them success in the past. The key to the next decade and beyond in one’s speed of adoption. It is imperative that one poses flexible capabilities, a desire to innovate, and a willingness to preemptively retire a functioning model.

Clearly the HP/Microsoft deal hopes to score on the adaption, flexibility, and innovation front. But, can we checkoff the structural attributes that compose a solid alliance? Regardless of the title – collaborative agreements, strategic partnerships, or strategic alliances – they all must meet the following four characteristics:

A common goal:  HP and Microsoft want to cut the cost of setting up and running a data center by selling a fully integrated turnkey solution. A solution that utilizes all the advanced features of both the software and hardware. Thus they have a common goal, expand their foothold into the data center market.

Participants remain independent:  It is clear that HP isn’t getting any Windows 7 revenue nor is Microsoft capturing printer sales.

Benefits and control is shared:  Each will be better positioned against a rival – HP versus IBM and Microsoft versus EMC.

Ongoing contributions:  This doesn’t refer to money but  technology, products, and other strategic insights. This venture will tightly couple software and hardware, a fingerprint of a deepening integration that can only work with an open line of communication.

This alliance framework can work for anyone. So wether you are pursuing a ‘store-within-a-store’ concept or a more traditional symbiotic relationship make sure you can check off each of the above.

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